SMALL businesses are unlikely to reap many rewards from new European legislation designed to cut red tape, according to a North East expert.
The EU’s Business Act for Europe was put together to make life easier for smaller firms, from simplifying access to funding to operating a business across the borders of different European countries.
But Angelo Basu, from Newcastle-based lawyers Ward Hadaway, says the law will make little day to day difference to small businesses because it does not go far enough.
Basu, head of EU and competition law at Ward Hadaway, said: “The Act simply isn’t bold enough and there are a lot more things that could be done for small businesses that would have made a larger impact.
“Small businesses will still have so much in the way of regulation that they face and things like this are tackling issues at the edges, rather than the things that affect smaller companies every day.”
The law will allow the governments in EU countries to reduce the VAT rate for locally supplied services, which are often the remit of small businesses, but the UK Government has not yet decided whether it will take up this option.
The Federation of Small Businesses (FSB) called on the Government to take advantage of the VAT opportunity to help companies struggling in the current economic climate.
“As the credit crunch bites, some of the first luxuries to go will be home improvements, eating out and a trip to the hairdressers, so local businesses in these areas will welcome this move,” said Tina Sommer, the FSB’s EU and international affairs chairman.
“The British Government must take advantage of these proposals to ensure our high street can survive the economic downturn.”
However, the Act does cracks down on late payments, so by next year small businesses should be paid within 30 days for goods and services they have supplied. “Having something to improve the speed of payments is very valuable.
“This will give small businesses a legal right to payments within 30 days, but it practical terms it will still have to be enforced,” said Basu.
